the interview
an application that looks virtually identical will be declined because it has failed the credit score. Street says that Kensington is not looking for a specific demographic of customer but its unifying factor is that the lender will use common sense to decide whether or not to accept a borrower, based on traditional manual underwriting, rather than the “black box” of credit reporting. “We’re not positioning ourselves to go for one particular sector, whether it be called complex prime or anything else. We want customers who can demonstrate their affordability and satisfy our criteria,” he says. “We see some people being rejected by
high street lenders for example and they don’t always even understand why they’re being rejected. They just don’t fit the criteria, but they won’t necessarily know what those criteria are.” Street says Kensington has never
access the customers we wanted to lend to.
“The second was intermediaries’ ability to tranche manage, or control the volume of lending they were arranging on our behalf,” he says. “We also wanted to make sure that firms had a strong control position over their operation and their distribution – either network partners or directly authorised.”
Both DAs and ARs can work with Kensington and Street admits it would be foolish for Kensington not to continue to review additional distribution as and when it was required. “The number of brokers we work with will be dependent on how many we need at the time and broadening the distribution will be all about bringing us incremental business, rather than spreading the same volume of business more thinly across more brokers,” he adds. Street’s appetite for increasing the number of brokers Kensington deals with is reflective of real demand for the lender’s products, which are traditionally underwritten and cater for those
26 mortgAge introducer AUGUST 2010
individuals who may have been rejected by the high street lenders after credit scoring.
But despite the rise in jargon such as complex or specialist prime Street is insistent that Kensington is not returning to its historical home ground of sub-prime lending. “I don’t think we are doing complex prime and I do get a little bit frustrated when people try to pigeon hole any type of lending into a particular sector,” he says. “We provide loans for people and we have particular criteria, which is fairly simple and straightforward, just like any other lender.” “A typical high street lender doesn’t have to call it specialist prime or complex prime, they use a credit scoring capability and you don’t know what goes on behind closed doors,” he points out.
Computer says no Many in the broking community have expressed utter frustration with what’s come to be known as the “computer says no” syndrome.
One week a lender will accept an application on certain terms and the next,
credit scored, preferring to underwrite business manually and taking an expert view on whether the business is right for its book, although it does credit check the borrower. Street is keen to underline that the lack of credit scoring doesn’t in any way undermine the quality of the business Kensington writes. “We use the same information essentially but the difference is how you interpret that information,” he says. “That’s where you can look at people whose circumstances maybe don’t fit the algorithm because for example they’ve perhaps got a couple of income streams, and it doesn’t work that way. “But if you can take a pragmatic view, and say, look, I can understand why this is happening, then you can make a more practical decision on it. There are a lot of tried and tested ways to prepare credit scores but it doesn’t look at the whole shape of the loan.”
Other new entrants to the market have taken a similar view on the underwriting side but offer an automated decision in principle to give brokers something to take back to the borrower immediately. At the moment Kensington doesn’t
offer a DIP facility but Street says it will be launching its full online portal later this year
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